A Doctor Who Disguised Skin Beauty Treatments as Manual Therapy and Athlete's Foot Treatment... Caught for Insurance Fraud

Embezzlement of 1 Billion Won Insurance Money
Over 270 Hospital Medical Staff, Brokers, and Fake Patients Arrested

A group involved in insurance fraud, who disguised skin beauty treatments as manual therapy and athlete's foot treatments to embezzle 1 billion KRW in insurance claims, has been caught.

According to the Financial Supervisory Service and Busan Nambu Police Station on the 3rd, over 270 people including hospital medical staff, brokers, and fake patients were arrested last month for embezzling indemnity insurance payments by disguising skin beauty procedures as manual therapy and athlete's foot treatments.

[Photo by ChatGPT (DALL·E 3)]

Doctor A devised a scheme to cover the costs of skin beauty procedures such as fillers, Botox, and water glow injections with indemnity insurance. He then led an organized insurance fraud involving luring fake patients and creating false medical records. A also increased his recognition through numerous TV appearances, YouTube channels, and internet fan cafes, using these platforms for long-term hospital promotion and patient recruitment.

When a patient paid for a skin beauty package, false documents were issued en masse to make it appear as if the patient had previously received manual therapy or athlete's foot treatment, and these were managed with notes marked "documents complete." For example, if a patient prepaid 10.5 million KRW for a package, false medical records would be issued for 25 sessions of athlete's foot treatment (5 million KRW) and 22 sessions of manual therapy (5.5 million KRW). Medical records were sometimes issued all at once so that the prepaid amount could be immediately claimed as insurance money.

A memo recording the issuance of false documents claiming past manual therapy and athlete's foot treatment corresponding to the amount when a group involved in insurance fraud pays for a skin beauty package. [Source: Financial Supervisory Service]

To avoid issuing false medical records on dates when the patient had been treated at other hospitals, A instructed staff with notes such as "Check other hospital dates before issuing (false documents)." He even showed meticulousness by distributing manuals to patients on how to file complaints with the Financial Supervisory Service and standard wording to use if the insurance company refused to pay the claims.

About 10 brokers enticed fake patients by claiming that expensive skin beauty procedure costs could be covered by indemnity insurance and referred them to the hospital. Doctor A paid approximately 20% commission on the amount paid by the patients. Broker B, a professional broker, referred 22 patients over two months, generating sales of 220 million KRW and receiving 39 million KRW in commissions as compensation.

Hospital staff operated dual medical records to separately distinguish between the patients' actual beauty treatment records and the false manual therapy and athlete's foot treatment records. They even issued false medical records to doctors' acquaintances who had never visited the hospital, transferred accumulated points (prepaid package amounts) among fake patients, and issued documents under the names of family members or others. Some staff enticed patients and received incentives of 3-5% of the amount patients paid to the hospital, in addition to their salaries. They also directly embezzled insurance money using the false medical records issued by the hospital.

Over 270 patients, lured by the hospital medical staff and brokers, received expensive skin beauty treatments but submitted falsely issued medical records to insurance companies, embezzling 1 billion KRW in insurance claims.

A Financial Supervisory Service official said, "Not only the hospitals and brokers who led the insurance fraud but also many patients who agreed and participated in their tempting proposals have been criminally punished," adding, "Insurance policyholders should be especially careful not to become involved in insurance fraud."

Insurance Fraud Structure Diagram. [Source: Financial Supervisory Service]